Uninsured Will Still Need The Money To Meet The Mandate

A bulletin board in New York's Jamaica Hospital offers advice for uninsured patients.

Seth WenigAP

Listen

Listening...

/

Originally published on March 27, 2012 7:32 pm

On Tuesday, the Supreme Court hears its second day of testimony about the Affordable Care Act. At issue is a central tenet of that law: whether it's legal to require individuals to purchase health care.

But apart from the legal debate, there are questions about the economics of the mandate. Some — like Peggy Bodner of Portland, Ore. — worry it may be difficult to find the money to pay for health insurance, even with government subsidies.

Bodner lost medical insurance when she lost her job three years ago. She has since found part-time work at the Oregon Zoo, but it pays half as much as her old job and doesn't offer health benefits. Despite being 41 and healthy, insuring herself under the most basic plan would cost at least $100 a month — more, Bodner says, than she can afford.

"It doesn't factor in the fact that I'm a nonsmoker, that I eat a balanced, low-fat diet, that I walk for exercise," she says. "None of those things are calculated in. And I'm like, 'OK, well what kind of a plan do you have for someone like me?' "

Starting in 2014, the law — if it's upheld — will require people like Bodner to get insurance. Oregon and all the other states will start running health care exchanges that match buyers with a selection of private insurance plans. The federal government will subsidize these plans on a sliding scale, which means people or families making up to four times the poverty level will get some help.

But for Bodner, even with the federal subsidy, a middle-range plan would still cost well over $100 a month — too much, she says, given her income barely meets her needs right now.

"To try and put another $100 or something like that into the budget, either something would have to go, or I would just be like, 'I can't afford this insurance; I'm not taking it,' " she says.

Under the new law, Bodner must either buy a plan or pay a fine that escalates every year she doesn't get insurance. But unless the penalty exceeds the cost of insurance, she says, she would probably just take the penalty.

Bodner's dilemma strikes at a critical question: Will the estimated 16 million people who will be required to buy subsidized insurance under the mandate actually do so?

Success of the law, after all, depends on the participation of all the key players. In order for it to work, states have to set up the exchange, insurance companies have to offer plans, and consumers need to be motivated to buy the insurance. Simply put, insurance works better when it involves large numbers — that way, both the risk and administrative costs can be distributed across many participants.

"There will be people who look in their pockets and say, 'I would love to be insured, but even with this subsidy, the amount that I have to pay is more than I feel I can pay,' " Weil says. "But the overwhelming response is going to be 'I finally have coverage within reach.' "

Weil says that just as other government medical programs became more popular over time, he expects people will warm to this one. Without the mandate, however, too many would opt out while a disproportionate number of sick people would opt in. According to Weil, that would destroy the system's economics.

"Remember, we've also eliminated pre-existing condition exclusions and the higher rates people pay when they're sicker," he says. "You put all of those things together and you say, 'We are going to make coverage more affordable.' And most people will respond to that. Because we've done that, we really do need everyone participating. And so we need the mandate."

That should be an easy sell to Jordan Lund. During a brief period when his family wasn't covered, his son racked up a $27,000 emergency bill.

Lund and his wife each have medical conditions, and they have also lost their jobs four times in the past year — facts that make Lund very aware of both the perils of not having insurance and the perils of having to pay for it.

"If somebody doesn't have money for health insurance, they're not going to have money for a fine, either," Lund says. "So it's not a matter of you can't get blood from a stone."

For now, he says, he's just hoping to hang onto his job so won't have to make a choice.

Now, as the justices delve into those legal questions inside the Supreme Court, we wanted to take up some of the questions people are asking on the outside.

NPR's Yuki Noguchi spoke with some people who say it could be difficult to pay for health insurance, even if they get government subsidies.

YUKI NOGUCHI, BYLINE: Peggy Bodner lost medical insurance when she lost her job three years ago. She's since found part-time work at the Oregon Zoo in Portland. But it pays half as much and doesn't offer health benefits. Bodner is 41 and healthy. Still, insuring herself under the most basic plan would cost at least $100 a month - more, she says, than she can afford.

PEGGY BODNER: And it doesn't factor in the fact that I'm a non-smoker; that I eat a balanced, low-fat diet; that I walk for exercise. None of those things are calculated in. I'm like, OK, well, what kind of a plan do you have for someone like me?

NOGUCHI: Starting in 2014, the law, if it's upheld, will require people like Bodner to get insurance. Oregon, and all the other states, will start running health exchanges that match buyers with a selection of private insurance plans. The federal government will subsidize these plans on a sliding scale, meaning people or families making up to four times the poverty level will get some help. But for Bodner, even with the federal subsidy, a middle-range plan would still cost well over $100 a month. Too much, she says, given her income barely meets her needs now.

BODNER: To try and put, you know, another $100 or something like that into a budget - either something would have to go, or I would just be like, I can't afford this insurance; I'm not taking it.

NOGUCHI: Under the new law, Bodner must either buy a plan, or pay a fine that escalates every year she doesn't get insurance. But unless the penalty exceeds the cost of insurance, she says...

BODNER: I would probably just take the penalty.

NOGUCHI: Bodner's dilemma strikes at a critical question: Will the estimated 16 million people required to buy subsidized insurance under the mandate actually do so? Success of the law, after all, depends on the participation of all the key players. In order for it to work, states have to set up the exchange; insurance companies have to offer plans; and consumers need to be motivated to buy the insurance. Simply put, insurance works better when it involves large numbers. That way, both the risk and administrative costs can be distributed across many participants. Alan Weil is executive director of the National Academy for State Health Policy. He acknowledges everyone won't sign up immediately.

ALAN WEIL: There will be people who look in their pockets and say, I would love to be insured but even with this subsidy, the amount that I have to pay is more than I feel I can pay. But the overwhelming response is going to be, I finally have coverage within reach.

NOGUCHI: Weil says just as other government medical programs became popular with time, he expects people will warm to this one, too. But without the mandate, too many people would opt out while a disproportionate number of sick people would sign up. And that, Weil says, that would destroy the system's economics.

WEIL: The point is, you put in place all of these things to make coverage more affordable. I mean, remember, we've also eliminated pre-existing condition exclusions and the rate - the higher rates people pay when they're sicker. You put all of those things together and you say, we are going to make coverage more affordable. And most people will respond to that. Because we've done that, we really do need everyone participating. And so we need the mandate.

NOGUCHI: That should be an easy sell to Jordan Lund. During a brief period when his family wasn't covered, his son racked up a $27,000 emergency bill. Lund and his wife each have medical conditions, and they've also lost their jobs four times in the past year - facts that make him very aware of both the perils of not having insurance as well as those of having to pay for it.

JORDAN LUND: So if somebody doesn't have money for health insurance, they're not going to have money for a fine, either. So it's a matter of, you can't get blood from a stone.

NOGUCHI: For now, he says, he's just hoping to hang onto his job so he won't have to make a choice. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.